Commodity Trade Finance: uncovering the Opportunities in Africa

In a recent Opalesque Radio interview with Sona Blessing, Nicolas Clavel, founder and chief investment officer of Scipion Capital, an investment manager specialising in self-liquidating short-term Commodity Trade Finance (CTF) with a focus on Africa, elaborates on the commodity trade finance opportunities, the hurdles and their ability to deliver consistent risk-adjusted returns.

From a sector perspective, the commodity trade finance fund focuses on minerals and agricultural commodities produced in Africa, which then tend to be shipped to destinations such as (mainly) China and Europe. The fund also finances the import of commodities into Africa, which is in sync with the continent’s growth and lack of available supplies for high in demand inputs such as cement and diesel.

"Each (structured loan) transaction tends to be in the 60 to 120 days range," he adds. And there are typically between 15 and 30 positions in the portfolio.

When asked why he chose to focus on investment opportunities in Africa, he identified it as being, "the continent that is the least able to meet the increased demand in commodity finance."

On a relative basis, Africa (including South Africa) is a small market. If you look for example at the total balance sheet of the 200 biggest banks of ......................